Correlation Between Performance Food and CELLULAR GOODS

Can any of the company-specific risk be diversified away by investing in both Performance Food and CELLULAR GOODS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Performance Food and CELLULAR GOODS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Performance Food Group and CELLULAR GOODS LS, you can compare the effects of market volatilities on Performance Food and CELLULAR GOODS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Performance Food with a short position of CELLULAR GOODS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Performance Food and CELLULAR GOODS.

Diversification Opportunities for Performance Food and CELLULAR GOODS

-0.21

Correlation Coefficient

Performance Food  CELLULAR GOODS

Very good diversification

The 3 months correlation between Performance and CELLULAR is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Performance Food Group and CELLULAR GOODS LS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CELLULAR GOODS LS and Performance Food is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Performance Food Group are associated (or correlated) with CELLULAR GOODS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CELLULAR GOODS LS has no effect on the direction of Performance Food i.e., Performance Food and CELLULAR GOODS go up and down completely randomly.

Pair Corralation between Performance Food and CELLULAR GOODS

If you would invest  0.05  in CELLULAR GOODS LS on October 5, 2024 and sell it today you would earn a total of  0.00  from holding CELLULAR GOODS LS or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Performance Food Group  vs.  CELLULAR GOODS LS

Performance Food

Risk-Adjusted Performance

0 of 100

Good

Over the last 90 days Performance Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively uncertain basic indicators, Performance Food unveiled solid returns over the last few months and may actually be approaching a breakup point.

CELLULAR GOODS LS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CELLULAR GOODS LS has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CELLULAR GOODS is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Performance Food and CELLULAR GOODS

The main advantage of trading using opposite Performance Food and CELLULAR GOODS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Performance Food position performs unexpectedly, CELLULAR GOODS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in CELLULAR GOODS will offset losses from the drop in CELLULAR GOODS's long position.

The idea behind Performance Food Group and CELLULAR GOODS LS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.